Government is the great fiction, through which everybody endeavors to live at the expense of everybody else.- Frederic Bastiat
Way to go Ben. Either you got religion or you realized that QE1 and QE2 were miserable failures. That’s because QE1 and QE2 were never about stimulus in the first place. It was more about bank stabilization and financing our deficit. QE should be all about stimulating spending, but the new loot was used by the banks to build up their reserves and not lend. Practically all the gains in the market since QE2 are just about gone by the way.
Ben however, is never far away, and there will be a two day meeting at the end of next month, so surely speculation that the seven hundred pound band aid called QE3 will return between now and Sept. 21 which is the next meeting. The market needed to get over itself last week. Enough of the government utter. We have become a country enabled, why shouldn't the market have the same sense of instant gratification and entitlement? Even though in the long run it's bad for us both.
So did the market rally Friday because it was way oversold? Did the market rally because things weren't "that bad" for The Bernanke to take additional action and folks took that as a bullish que? It wasn't a policy meeting really anyway, or did it rally because the "easing addicts" are looking forward to the end of September for a new QE crack shipment?
Much still depends on Europe, but I did think the action Friday was bullishly constructive from a pure technical standpoint. Most charts still look ready for the wood chipper, but we all know they can still rally and we could be setting up for a nice September rally. Stay tuned.